I started my career in IB (BB company) out of undergrad from a regional target school. I had held internships at other BBs prior to my full time role. I started my analyst position in Summer 2007. By Summer 2008, my entire group had been right-sized (I got canned in the third round of layoffs).
corporate development mergers and acquisitions
I grabbed ahold of a life raft in the form of a Corp Dev role at a quark-sized private company. It was definitely not my first choice, but it served as a transition into my Corp Dev career. After a couple years of experience under my belt, I grass-is-greener’d it to a larger public company (my current role). The company at which I am currently employed deals with various natural resources, so there’s a fair amount of commodities knowledge and research involved.
Responsibilities in Corporate Dev
M&A – One of the core responsibilities of Corp Dev is to drive and manage the acquisition function of our company. This involves the sourcing of deals, internal presentations to management/BOD, due diligence, acquisition integration, and post-closing forecasting (until FP&A has a handle on it). Traditionally, we have not been a very deal heavy company (1-2 acquisitions per year), but we’ve definitely been far down the road with more companies that the successful acquisitions would indicate. I believe we will be more deal focused in the next year or so based on the long-term strategy materials I recently produced.
Financing in Corp Development
Financing – The other core responsibility of Corp Dev at my company is to provide financing for all of the various acquisitions, development projects, and corporate initiatives (e.g. stock buyback programs). I’ve done seven different rounds of financing at my current role including (but not limited to) project loans, term loans, high-yield notes, margin loans, an IPO, and multiple working capital revolvers. We’ve been at least 2x oversubscribed on every deal, so I would attest that our team has been doing a good job on this front.
Company Forecasting
Forecasting – Our company only has a fledgling FP&A function, so the role of forecasting has been traditionally done by Corp Dev. In the past, I was responsible for providing forecasts for all of our operating units (we’ve since grown quite a bit and this responsibility has been spread amongst multiple individuals). I believe this probably happens at a lot of smaller companies where resources are limited. It is definitely good experience though, and it helps cultivate relationships with all of the major players at the operating units (ops management, marketing, accounting, etc.) which is useful when trying to gather intelligence and expertise for an acquisition opportunity.
Creating Ad Hoc Reports
Ad Hoc Reports – Our company produces a fair amount of ad hoc reports for management, the board, investor relations, and in some rare cases, activist investors. Most recently, I put together the long-term forecasted financials for the consolidated company, which was a very interesting process. There is definitely much to learn when going through this process (restructuring ideas, tax efficient strategies, capital funding requirements for growth projects, etc.). I’ve had to perform multiple deep dives for our operating units (easily my most despised corporate term). I’ve also thrown together some presentations for IR to help explain an acquisition target’s main operating metrics and drivers of value.
Qualifications to get a Corporate Development / Strategy Job
Almost our entire team is comprised of burnt out bankers (junior and senior employees). There is one junior employee who came from FP&A at a F500 company who is playing catch-up on learning valuation techniques and nuance, but other than that does a pretty solid job. We’ve hired individuals who’ve come from PE firms abroad (specifically to deal with our international assets) and one former consultant, but I would say that this is not the norm.
Very strong Excel and PPT skills are needed to be successful in a Corp Dev role (similar to banking), although I find that you can get away with being a little sloppier than banking (not my style, but I see other people get away with it). Our company uses a lot of Bloomberg since we deal in multiple commodities, so it’s definitely a good idea to learn to navigate that platform. We use Capital IQ on occasion when our M&A opportunities have dwindled and we need to shoot some adrenaline into our process.
As my company is not F500 or prestigious, a BS in business/accounting is usually sufficient. For some larger companies, I know that an MBA can be required. Two of my coworkers have their CFAs, although they finished them while they were already at our company. It is my personal opinion that a CFA designation only marginally adds value to a Corp Dev role as it doesn’t focus so much on forecasting or fundamental valuation techniques. It really only matters if your management values the designation.
Skill Set Needed for Jobs in Corp Dev
Obviously, technical modeling competency is a must. Most companies don’t have much in the way of resources or templates, and I’ve found coming into companies that their models can be atrocious and nearly impossible to audit. The ability to build full operating models with a high degree of understanding is absolutely necessary.
While good presentation skills will get you by, the ability to use those skills to persuade (vs. simply informing) is highly desirable. I’ve had instances in my past where I put together a great presentation with lots of valuable information and management has come away from the meeting making the opposite decision that I would have hoped for. In retrospect, I should have driven the point home, made it clear what my position was, and then been relentless in supporting my position (also, I was correct in this case as the scenario I presented played out over the year after I made the presentation). Sometimes you need be able to pound the table, literally and within a PPT, to really get your position across to management.
Communication skills are of utmost importance in Corp Dev. One interacts with so many individuals across various diverse functions, all with different lexicons and levels of expertise. Being able to effectively understand and translate information from all of these different units is an invaluable skill, as information often gets lost or misconstrued on its way from an operating unit to management. I very often get asked by management what this-or-that means when they receive info or data from a unit.
Resource management skills come into play quite often. When dealing with multiple lenders on a financing or investment banks/third-party consultants/lawyers on an acquisition, you need to be able to (A) manage their costs, (B) make the most efficient use of their time, and (C) communicate all of the necessary info to each party to be able to get back the materials you need in timely manner.
There is a high degree of ownership to your work in Corp Dev, so you need to be confident in the materials you produce. Confidence is also key because you will be likely be competing for resources within your company (e.g. cash or individuals’ time) and need to be able to get management on your side to get those resources allocated to you.
Time Commitment in Job in Corp Dev
One of the best things Corp Dev offers is a manageable and flexible schedule. In my early days with my current company (pre-FP&A function), my hours could be pretty bad because I was subjected to deal cycles AND reporting cycles. The close of some months/quarters were absolute hell. Since we’ve grown the function, my hours are generally 9am -7pm with minimal weekend work.
I find most weekend work is deal related (which is exciting and I’m completely fine with) or BOD meeting related (bleh). I believe the amount of weekend work completely depends on which type of manager you have, as I’ve had some that simply can’t turn off the work switch in their head and assume that you’re on the same page at all times. I personally find that weekend work that requires coordination is a waste as it takes a lot longer to complete something with your team when everybody is scattered and you’re better off just working a long Monday to complete the task (unless the deliverables are due Monday, in which case you better crack that whip).
Compensation in Corp Dev
I believe the compensation for Corp Dev is very fair for the amount of work required and stress involved. Starting salaries for junior Corp Dev employees in my company are just a hair under six figures (with bonuses taking them over). Mid-level managers make about $125-150K with bonuses and stock options taking them above $200K. All of the senior managers are above $200K with significant bonuses/stock options.
Exit Opportunities
Corp Dev is filled with finance professionals, a group of which I believe can move on to just about any opportunity they desire. I find that most individuals in Corp Dev move to other roles in Corp Dev. However, some move to VC or PE, while I’ve seen others move into sales and other unrelated roles.
The key to making your desired exit from Corp Dev to another type of role is significantly dependent on your ability to network. My work in Corp Dev has had me intimately engaged with multiple banks (IB and commercial), PE shops, activist HFs, and institutional investors. I frequently communicate with these parties, not only from a business sense but on a personal level. Depending on your ability to impress and cultivate relationships with others in a business setting, it should be relatively easy to leverage those relationships into new roles, should you
so desire to bail on Corp Dev. You will also need to have a good story as to why you want to make the jump.
Respect and Prestige of Corp Development Jobs
While Corp Dev doesn’t carry the prestige of IB, PE, or a HF, most of the people I work with are either qualified for those roles or have previously been employed in those roles. It’s definitely a lifestyle choice when it comes to Corp Dev. You trade prestige for time, flexibility and freedom. That’s not to say that some large or high profile companies don’t carry a lot of prestige from their Corp Dev teams (or any roles, for that matter). I will say that despite my Corp Dev role, my friends in PE/VC often like to bounce ideas off of me or look to me for advice, so the respect you desire is ultimately a function of your own abilities.
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I hope this was helpful to anybody considering a role in corporate development. Please feel free to ask questions and I’ll try to respond in a timely manner.
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Shlomo, I actually went through the transition from FP&A to CD about a year ago.
The biggest proponent of being able to secure a move like that, in my opinion, is to establish a reputation for a superior level of work. Not only that, but you want to be making that impression on a diverse group of people -- seize the opportunity to do work for as many different senior level folks as you can, especially the ones who are viewed as top performers/managers. I will say that my experience is with a smaller company ($10-20B market cap), so it was a little easier to get my name out there vs. a huge multinational.
The other thing that I think would typically hold someone back from making the jump is the lack of ability to think about problems from the business perspective. Obviously the long-term financial impact of any decision is the biggest concern of everyone at the company, but when you start to tackle value proposition/client segmentation/competitive dynamic/strategic fit questions, the structure of the discussion tends to be a lot less defined than your typical FP&A analysis.
1) Deliver superior work in your current role 2) Understand your company's place within your competitor set, and spend as much time as possible developing your knowledge base of how your company and each of your competitors compete and win business 3) Make your desire for a CD experience known -- albeit, at the right times and to the right people
I'll say again that I just moved over to CD a year ago, so for all I know this could be pretty trashy advice...But hopefully it doesn't lead you too far astray.